According to a survey conducted in 2016, 39% of businesses and companies in the U.S. have their payroll processing outsourced. Additionally, 43% of companies approach outsourcing services for their payroll tax obligations.
With so many businesses today outsourcing their payroll generation, one has to wonder what its benefits are over the conventional internal management systems. Let’s find out!
Hiring a service to manage your company’s payrolls is actually quite cost-effective. The cost of outsourcing payroll is typically less than having it managed internally, and saves the company from providing training to in-house employees for this purpose.
Fewer Compliance Issues
Tax rules and regulations associated with payrolls are quite complicated, and can be difficult to grasp and implement by those unfamiliar with the taxation system. For small business owners, this can prove to be an even bigger challenge as they’re legally responsible for drafting accurate payrolls while simultaneously managing their businesses.
Having the payroll outsourced by a professional service prevents the company from compliance issues. They handle all the taxes, filings, and payments made by the company, reducing the risk of making costly errors. Their thorough and up-to-date understanding of government rules makes them especially accurate at their job.
Since payroll service providers are experts in their field, they are equipped with technical resources and a team of experts to manage the task. Not only does this result in accuracy, but the payrolls are also generated quicker and more smoothly than they would be otherwise. For instance, if a company has an addition of a new employee or if somebody leaves the organization, this change will be instantly be noted and included in the payroll system for an efficient payroll generation.
Access for Employees
Having your payroll outsourced gives your employees access to their personal payrolls. They can view the information available and can update it as required. This makes for a more efficient and user-friendly process and the employers themselves don’t have to stress about maintaining individual payrolls.
If you’re having your payroll processed in-house, there’s always a risk of security breach. There is a chance that the personal information of your employees may be leaked or shared within the office, which can result in a number of problems. Company records may be interfered with, payments may be manipulated, and there may even be cases of identity theft.
With an outsourced payroll, you can prevent potential safety breaches. The employee information is kept strictly confidential and you don’t have to worry about security risks.
More Reliable Backup
With an outsourced payroll service, you are assured of your valuable data being backed up. Professional services dedicated to this task keep backup systems for different clients so that in case of a software malfunction, the data can be easily retained.
This is always a risk for companies who manage their payrolls internally, as they are not always equipped with top notch backup systems required to secure the data. Thus, retrieving this valuable information can be costly and even impossible at times. With a payroll service provider, on the other hand, this isn’t an issue.